Home Expert Blog Protecting America’s Future through the Federal Pell Grant Program

Protecting America’s Future through the Federal Pell Grant Program

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September 21st, 2011
By Brian K. Fitzgerald, Chief Executive Officer, BHEF

Increasing American competitiveness will require saving the Pell Grant program. A series of recession-driven forces have converged on lower-and middle-class American families, reducing families’ ability to pay for college at just the time we need more Americans earning college degrees.

Recent reports paint a shocking picture of the impact of the recession on American families. According to the U.S. Census Bureau, household income has fallen to 1996 levels, and the number of households in poverty has skyrocketed to levels not seen since 1993. Additionally, the Federal Reserve reports that household net worth (stocks, bonds, home equity, and savings) dropped in the second quarter of 2011. The on-going housing crisis continues to drive down home values, eroding equity, while the summer-long stock market plunge has added to family losses. The decline is most precipitous for African American and Hispanic families, whose net worth tends to be heavily affected by home value. A Pew Research Center study indicates that median family wealth for these groups plunged by two-thirds to just $5,700 and $6,300, respectively, since 2005.

This erosion in family income and wealth has serious implications for families with college-age students, increasing their reliance on student aid programs. More than 8 million students and families—up from 5.5 million in 2008—now rely on Pell Grants to access college and technical training, 6.4 million of whom have family incomes of $40,000 or less. This spike in recipients is the result of the recession depressing families’ income and assets as well as unemployed Americans turning to postsecondary education for training. And as we seek to ensure students are prepared for the jobs of the future, families will increasingly rely on federal sources of student aid, including the Pell Grant program.

Despite these urgent realities, concerns for the deficit and debt led to a U.S. House of Representatives proposal to cut the program as a way to control spending. Two BHEF past Chairs, David J. Skorton, President of Cornell University, and William H. Swanson, Chairman and CEO of Raytheon Company, recently wrote in support of the Pell Grant program. In an Op Ed in USA Today, Cut costs not access to save Pell Grants, they urged Congress to use strategies to achieve savings in the program, for example, eliminating multiple awards in a single academic year, rather than restricting college for needy families by lowering the maximum award of $5,500. BHEF has also published a policy brief on preserving the Pell program.

Now, the Joint Select Committee on Deficit Reduction must achieve at least $1.2 trillion in cuts to domestic discretionary and mandatory programs. And, once again, the Pell grant program could be on the chopping block.

Fortunately, the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies approved a 2012 appropriations measure yesterday that maintains the maximum Pell Grant at the current $5,550 level. But this victory comes at a cost—the elimination of the interest subsidy on loans for undergraduates during the six month grace period after graduation. 

The United States can ill afford the self-inflicted wound caused by pricing a generation of Americans out of achieving their college and their career goals while also it also faces unprecedented global economic competition. The Pell Grant program represents a last line of defense to families struggling under the effects of the recession and a country seeking to ensure its position of strength in the global economy. For the future of this country, and the many Americans depending on the federal student aid programs to access college, we must protect Pell.


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